China dominated the first few weeks of the year, with worries about slowing growth in the region weighing on investors’ minds and, combined with the low oil price and commodity concerns, emerging markets spent the early part of 2016 out of favour.

More recently, however, a bounce in the oil price to $50 a barrel and easing China concerns have seen emerging markets and commodities turn the tables and become some of the best-performing asset classes.

S&P Dow Jones Indices notes that in May the S&P GSCI index recorded its third consecutive positive month with a gain of 2.2 per cent – the first time commodities has gained three months in a row since April 2014.

Meanwhile, the IA Global Emerging Markets sector has produced an average return of 5.1 per cent for the year to June 1 2016 compared with the IA Global sector average of 2.5 per cent and the disappointing average loss of 0.6 per cent from the IA UK All Companies sector, data from FE Analytics shows.

This highlights the effect that the hot topic of the moment – the EU referendum next week – is having on UK markets and investors.

The debate surrounding the UK’s decision to either stay in or leave the EU is ongoing and shows no signs of slowing with less than two weeks to the vote; as a result, the frenzy is beginning to distort investor sentiment.

Both camps have predicted disaster – no matter what the UK decides – so it’s little wonder that many investors have adopted a ‘wait and see’ approach, and those that are investing are being more cautious.

Figures from the Investment Association show overall net retail sales reached £1.2bn in April, with fixed income the most popular asset class and the Targeted Absolute Return as the favourite sector, while UK equity funds recorded net outflows of £310m.

Adam Laird, senior analyst at Hargreaves Lansdown, notes: “The popularity of bonds and absolute return funds shows investors are nervous. Volatility from the start of 2016 has knocked investors’ confidence and they are fearful of the Brexit vote.

“Fixed income and absolute return funds are generally more cautious sectors which may hold up better around the referendum.”

In a period of such uncertainty, it is therefore perhaps a little surprising that our annual research into ‘red flag funds’ – those at risk of closure or merger – and ‘closet trackers’, actively managed funds with tracker-like tendencies, have both shown a decline in the number of funds falling into the metric.

The number of red flag funds has fallen to 23 this year from 40 in 2015, with a number of funds previously identified either closing, improving performance or gaining new inflows.

Meanwhile the number of closet trackers identified by Investment Adviser’s rigorous metric has seen the list dwindle from 15 last year to just four in 2016. This could perhaps be attributed to the market volatility and the fact that many big index constituents, especially in the UK market, sit in the out-of-favour oil and resources sector that has been shunned by many investors.

So what next for the second half of the year? Once the referendum is out of the way, with many predicting a ‘Remain’ vote, this could lead to the uncertainty around the UK dissipating, but there are still other global macroeconomic issues that could provide headwinds to investors.

Japan, more recently one of the stalwarts of the market, is starting to come under pressure after prime minister Shinzo Abe postponed the scheduled increase in sales tax for the second time, to 2019, shaking the faith of some investors in whether ‘Abenomics’ will continue to work.

Meanwhile, the policy of central banks continues to diverge and, as such, remains a concern for many.

In its latest meeting, the European Central Bank postponed any further monetary stimulus, also perhaps awaiting the outcome of the referendum, while expectations of the US Federal Reserve increasing interest rates in June have started to wane.

For the savvy investor, a wait-and-see approach may seem boring but, for the next few weeks at least, it could be the most sensible.

Nyree Stewart is features editor at Investment Adviser